Sensex, the prime 30-share index of the Bombay Stock Exchange (BSE) staged a comeback on Friday and ended the week on a positive note, gaining 2.63 percent or 403.17 points, even as concerns persisted about weak US economy and subprime crisis.
The benchmark index, which fell 4.78 percent or 770.63 points on Thursday, rallied on Friday to post healthy gains and close at 15,760.52, with 24 components advancing. The index struck an intraday high of 15,798.42 and a low of 15,331.35.
The market rally was led by India's No.2 bank, ICICI Bank, which rose 4.81 percent to Rs.878.20 and top listed firm, petrochemicals and refiner Reliance Industries Ltd (RIL), which rose 3.57 percent to Rs.2,321.70. The two stocks contribute to at least a quarter of the index's weight.
India's biggest real estate developer in terms of market capitalization, DLF, rose 7.83 percent to Rs.654.25 even as smaller rival Jaiprakash Associates soared 7.83 percent to Rs.236.25 after it was included in the main BSE indexon Friday, replacing Bajaj Auto.
Metal stocks witnessed healthy gains with Tata Steel Ltd, the world's sixth-largest steelmaker, rising 2.59 percent to Rs.715.25 and aluminium maker Hindalco gaining 4.52 percent to Rs.181.55.
Larsen & Toubro (L&T) (up 3.68 percent) and Reliance Energy Ltd (REL) (up 8.26 percent) also contributed to the Sensex rally.
NTPC (up 4.74 percent), Satyam Computer Services (up 4.61 percent), ITC Ltd (up 3.50 percent), Reliance Communications (up 3.37 percent), Tata Consultancy Services (TCS) (up 3.21 percent), ACC (Up 2.72 percent), Infosys Technologies (up 2.69 percent) and Tata Motors (up 2.51 percent) were other major gainers.
Grasim Industries, Cipla, ONGC and Hindustan Unilever Ltd (HUL) also ended in the green.
Top losers were Bharti Airtel (down 3.27 percent at Rs.752.95), Mahindra & Mahindra (down 1.75 percent at Rs.649.45), Ambuja Cements (down 0.70 percent at Rs.120), Maruti Suzuki (down 0.54 percent at 835.20) and BHEL (down 0.20 percent at Rs.1878.95).
Lower rung stocks underperformed on Friday as the BSE Midcap and Smallcap indices ended with marginal gains of 0.85 percent and 0.05 percent at 6583.45 and 8079.50.
All the sectoral indices witnessed gains during the day, the charge led by BSE Realty index (up 4.76 percent), BSE Consumer Durables index (up 4.03 percent), BSE Oil & Gas index (up 3.32 percent), BSE Metal index (up 3.28 percent) and BSE Bankex (up 3.05 percent).
Other counters ended in the green, climbing in a range of 0.08 percent to 2.86 percent.
The BSE market breadth was marginally negative as 1458 shares declined, 1214 shares advanced and 60 shares remained unchanged.
The broader 50-share S&P CNX Nifty of the National Stock Exchange (NSE), which shed 248.40 points on Thursday, rose 2.64 percent to close at 4,745.80 after touching an intraday high of 4,758.95 and a low of 4,607.55.
However, investors continue to be wary as the Sensex has shed nearly 2000 points this month.
Today's rise was more of a technical bounceback, said Nipun Mehta, chief executive at Unitis Tower Wealth Advisors. Markets are still nervous and the outlook remains more negative than positive.
Over the last few days, the sentiment had turned bearish and the market was in an oversold condition. So a pullback was expected today, said Birendra Kumar Singh, technical analyst at Religare Securities.
Reports of rising inflation, rupee appreciation against the dollar, steep fall in industrial growth, spiraling prices of crude oil and political unrest over India's nuclear agreement with the US are dampening investors' sentiments, market analysts said.
Meanwhile, India's Finance Minister P. Chidambaram tried to allay investors' fears by saying, Friday, that some volatility was to be expected in local markets when there was turbulence in the international financial markets.
Speaking during a debate in the Indian Parliament, Chidambaram said that while the market was an important indicator, it should not be treated as the sole indicator of the Indian economy.
India has a well-established regulatory system that would ensure there was no excessive volatility, he said, adding that India's economy should maintain growth levels above 8.5 percent in the coming years.
Elsewhere in the region, Karachi's 100-Share index edged up 0.08 percent at 15,087.47, but Colombo's All-Share index eased 0.17 percent to 2,566.03.
Among Asian markets, Japan's Nikkei ended 0.5 percent lower, Hong Kong's Hang Seng fell 0.29 percent while Singapore's Straits Times advanced 1.19 percent.